Law expert Paz Zárate speaks to the Herald

Friday, August 8, 2014

'It's highly unlikely that the United States will accept'

By Fermín KoopHerald Staff

Argentina’s move yesterday to ask the International Court of Justice in The Hague to take action against the United States opened up a new chapter in the long-term case against “vulture funds.” However the possibility of the court being able to pronounce itself on the dispute is remote, as it would require the United States’s consent to the court’s jurisdiction, experts warn.

In an interview with the Herald, public international law expert at Oxford Analytica Paz Zárate says there is not much chance of the United States granting the subordination of its Judiciary, arguing the Argentina voluntarily gave up its sovereignty by issuing debt in another country.

What do you think of Argentina’s decision to go to The Hague?

It’s an understandable and respectable gesture that expresses the country’s dissatisfaction with international regulation regarding sovereign debt.

Are there real chances of the United States accepting the court’s jurisdiction?

It’s highly unlikely as the United States isn’t obliged to accept and has no deadline to decide. Argentina has issued a request to the court but there’s no real case yet.

Why is that?

Sovereign debt isn’t ruled by international law, it’s ruled by the commercial contract law chosen by the country in which the debt is issued. Many countries such as Argentina voluntarily submit to the jurisdiction of the courts of New York, but there’s also debt issued under the law of England and Luxembourg. By doing this, they relinquish their sovereignty.

Has the United States accepted the court’s jurisdiction before?

Yes, the country has accepted it 22 times.

If the United States says yes, how would the case be carried out?

The case would be filed and follow the regular path of contentious cases. Argentina would issue a detailed report of its demand and the United States would have to reply. Such reports take years to prepare. It’s a complex process.

If the United States says no, is it forced to suggest an alternative solution?

No. It’s true that states are forced to solve their conflicts peacefully according to United Nations treaty. But the United States doesn’t have to propose a counter offer. They probably won’t accept the jurisdiction but due to the bilateral relations between the countries, and what this conflict has meant to Argentina they will probably issue a political declaration to Argentina explaining why they cannot get involved in the dispute with the vulture funds. A state is generally responsible for the decision of its courts. But since Argentina gave up its sovereignty before, there was no violation of it.

Is there an alternative path for Argentina?

Argentina could ask the International Court of Justice for an advisory opinion. The Hague has two jurisdictions. One is for cases between states like the one filed, where sentences have to be issued, and the other one is advisory, where it’s about opinions. But do that, an institution like the United Nations or the International Monetary Fund has to file the request, a country can’t do it.